Wednesday, 28 September 2016

Independent review confirms funding cuts will put Lancashire County Council in the red to meet legal provisions

Lancashire County Council has published an independent review of its finances which confirms that thanks to Tory government funding cuts, its long-term financial position is not sustainable, even if it makes significant further savings. 

Funding reductions, which aim to achieve £262 million in savings by 2020, have already meant swingeing reductions to many services, with bus service subsidies, library closures and other services run by the Council scaled back, to the dismay of users. 

The report, which will go to Cabinet tomorrow, on Thursday 6th October, is an independent review of the council's financial position, carried out by the professional services firm PwC and suggests that the Council will be operating in deficit by 2021 if funding issues are not addressed.

The review has looked specifically at the resources that the county council needs to deliver its statutory services. These services, which the council is required by law to deliver, include care for the elderly and vulnerable, safeguarding of children and young people, and highways maintenance. 

County councillor David Borrow, deputy leader and portfolio holder for finance, said: "We asked PwC to provide an independent review of our financial position to establish the level of resources we will need to provide those statutory services that we are obliged to deliver by law. 

"That independent review has now been completed and sets out in stark relief the scale of the challenge we face. The report has identified that the Council will need to make savings of £148m in 2020/21, even allowing for council tax increases of 3.99% every year for the next four years. 

"Significantly, the report forecasts that the council's reserves, which we are currently using to balance our budget, will run out in 2018/19. 

"The report also found that even if the council further reduced spending in every service to the level of lower quartile spending councils in England, something which no other council has achieved, it would still face an annual spending gap of £79m by 2020/21. 

"This independent confirmation that our finances, like those of many other councils, are clearly not sustainable will help us to make the case to Government that they need to rethink how they support councils." 

The report also identifies various contributing factors to the council's financial position, such as the council's relatively low income from council tax, which reflects the types of housing and relatively low levels of prosperity in the county. Lancashire has the third lowest council tax income of any county council in the country, per head of population. 

Local Tory MPs have long argued Lancashire County Council's reserves should be tapped for service funding. 

• The report was published as part of the papers for the Executive Scrutiny Committee meeting on Tuesday 4 October and you can read it here

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